The economic development of regions in Ukraine: with tests on the territorial capital approach

Abstract

The territorial capital approach is used to investigate the economic development of regions in Ukraine in an empirical model. In addition to ‘traditional’ models of regional development, potentially important variables for economic growth, such as elements of social and societal capital (e.g., trust, corruption, non-profit organizations, libraries), are included. Furthermore, the effects of the military conflicts in Ukraine on regional development are described. The empirical results suggest that—while there are no clear-cut effects of all elements of the territorial capital—some interesting variables are of significant importance for the regional development in Ukraine. For instance, strengthening the cultural and social, as well as institutional capital as parts of the overall governance structure, may have positive effects on regional development equal to those originating from hard infrastructure, such as roads and railroads. The results also indicate that—besides the devastating effects of the military conflicts—there is a range of options for public policies supporting territorial capital. These policies include the provision and implementation of robust legal frameworks to increase trust and to reduce corruption, the support of educational efforts and the institutions of civil society, and the promotion of local (i.e. municipal) investments in the framework of a foundational economy.